Budget 2011 as it happened: March 23

George Osborne has delivered the 2011 Budget. He announced a raft of surprise
measures from corporation tax and fuel duty cuts to the bank levy rise
designed to drive economic growth in Britain. Follow reaction here.

Latest

17.30 With Britain's big economic brains hunkering down to analyse the small print of today's Budget, that's it for the Telegraph's live blog for tonight. Get more news and analysis on the 2011 Budget on Telegraph Finance.

17.08 As the furious pace of reaction to today's Budget slows down, here is some analysis from Politicshomeeditor Paul Waugh. Using the "ready reckoner" charts provided by the Treasury, he asks whether this a progressive Budget or not, and comes to the following conclusion:

What is singularly missing is a chart showing the pounds and pence impact of the indexation of CPI on taxes.

This change, a truly Brownesque move in its complexity, is the big stealth tax rise in this Budget. Treasury officials today described it as "a small tax rise" that is more than offset by the income tax threshold changes. But although it starts at £105m for 2012/13, the income it raises soars to a juicy £1bn by 2015. And it looks permanent.

17.03 Late night cab fare warning from Ernst & Young:

The proposed withdrawal of the late night taxi exemption will probably increase the cost on businesses where they provide taxis home for their employees.

Although the Revenue has tightened the rules around this exemption in recent years, it is likely that employers will continue to provide this benefit to their employees while meeting the tax on their behalf.

For a £30 taxi fare the tax cost will be around £13 for a basic rate tax payer rising to around £38 for the highest earners!

16.58 The Telegraph’s Retail Editor James Hall predicts queues outside the corner shops before 6pm tonight, as the price of cigarettes gets whacked up again.

He tweets:

Massive tax increase for people who smoke "economy" fags. 50p exta per pack from 6pm tonight. "Posh" fags - Marlboro Lights etc - up by less

16.50 Market update from Telegraph's Rachel Cooper: Having stayed virtually flat during George Osborne's speech, the FTSE 100 finished up 33.17 points to 5795.88, helped by strength in mining stocks. Traders said that the Budget had done little to cause market ripples. Joshua Raymond, market strategist at City Index, said: "Today’s budget reading was largely a non event, with many of the details causing little of a surprise to traders."

16.32 Channel 4 News economics editor Faisal Islam has pointed out the Treasury is having it "betty bothways" on the measure of inflation it uses. He tweets:

@faisalislam Applying high RPI rises to booze and fags and low CPI to payouts and tax thresholds. Stealthy.

16.12 The Budget document suggests that the flagship policy of cutting corporation tax was something of a last minute move.

The Telegraph's Emma Rowley asks:

Do desperate times call for desperate measures? The Office for Budget Responsibilty has hinted so, in the press release accompanying its latest forecasts. The fiscal watchdog said: "We were ... informed of the corporation tax main rate cut and the additional 1p cut in fuel duty after the deadline for incorporation in the economic forecast."

Ed Balls has picked up on the same point. The shadow Chancellor has tweeted:

@edballsmpAs I suspected... OBR says Corp Tax cut last minute & likely to have no impact on growth or investment- B13, p75 http://bit.ly/eVId0a

15.57 There's much discussion on whether oil majors have joined the banks as public and political enemies. The oil companies reckon that they face £10bn in extra tax over the next five years. But this is small fry in light of profits from soaring oil prices. Last year, Shell alone made £11.7bn. And investors know it: shares in both Royal Dutch Shell and BP are up today.

15.30 The unions aren't at all impressed. Len McCluskey, general secretary of Unite, reckons George Osborne has "just re-arranged the furniture". In a statement he has warned: "No one should be fooled by this budget, it's a mirage from the architect of the most devastating cuts to jobs and services in generations."

He's added: "What is on offer is tax cuts and deregulation for corporations, whilst attacking workers’ rights in small companies. This budget has not actually created any jobs. The tax avoidance measures to claw back £1bn of taxes is a drop in the ocean compared with the £30bn of taxes lost through avoidance every year. If you are struggling to make ends meet, there is very little in this budget to help you."

15.18 Business body reaction is positively gushing so far. Even the banks aren't too fussed: the Chancellor has blatantly reversed on the Merlin agreement but the bank levy rise will only cost around £100m. And bank bosses acknowledge its a PR stunt more than a trend. Here's some comment from trade body leaders:

David Frost, Director General of the British Chambers of Commerce (BCC), said:

There are some real pro-enterprise moves in this Budget that businesses will commend. Reducing corporation tax rates by 2pc this year is a measure of real substance. We also welcome the Government’s desire to speed up tax simplification, and to remove the much-disliked 50p top rate of income tax.

Smaller companies in every corner of the UK will take heart from the Chancellor’s moves to cut fuel duty, maintain business rate reliefs for an additional year, and to exempt businesses with fewer than ten employees from new regulations.

He made a crucial down payment on creating a stronger and more balanced economy with measures to boost investment in technology, research and development, and skills. The Growth Review has now started to deliver tangible process in removing the barriers to growth, investment and job creation in the UK

However, for manufacturers, despite the encouraging measures on investment, the significant rise in energy bills threatened by the Carbon Price Floor is unwelcome. The next stage of the Growth Review must seek to develop a more co-ordinated and cost effective approach to creating a low carbon economy.

15.05 As predicted by the Telegraph's Jonathan Sibun, the brewers are not happy that the duty escalator on alcohol has not been lifted, and the fact the tax regime lumps beer together with stronger drinks such as spirits:

SABMiller's Kristin Wolfe said: Today’s announcement is a bitter disappointment for beer drinkers. The decision to continue with the duty escalator means that most consumers will see a 7.2% hike in the tax they pay for a pint.

Mark Hunter, Molson Coors' chief executive in the UK, did not mince his words either:

We are baffled by the Treasury’s continued persecution of beer and pubs in Britain since the 1990s and we believe it is no coincidence that concerns around higher strength drinks have mushroomed over the same period.

This disjointed approach to alcohol policy confounds genuine efforts to improve drinking behaviour and respect for alcohol across Britain and flies in the face of support for UK manufacturing.

14.57 Is this the moment that caused Ladbrokes to pay out a four figure sum? Ken Clarke certainly looks to be resting his eyes...

14.54 The Telegraph’s chief leader writer, David Hughes, says the Chancellor didn’t have much room for manoeuvre, but what he did have he has used well:

The headline announcement was his decision to introduce a fair fuel stabiliser that will see fuel duty fall as petrol prices rise and vice versa. The assumption has been that the Treasury would have to foot the bill for such a plan. Osborne has been cute and made the oil companies – currently posting record profits – foot the bill.

14.42 Ladbrokes reckons it has incurred the first corporate cost of the 2011 Budget. The bookies has tweeted that it is paying out for bets placed that Kenneth Clarke, Justice Minister, would fall asleep during Osborne's speech.

Ladbroke's losses seem to have been triggered by an earlier tweet by Labour MP:

@DAlexanderJust left Chamber where I watched as Ken Clarke dozed off while the Chancellor tried to convince us he had a growth strategy

14.41The Telegraph's Janet Daley also sees shades of Gordon Brown in the Budget, but with the private sector taking the lead rather than the state to create growth:

It was a bit like Gordon Brown turned inside out: George Osborne’s Budget turned out to have lots of little projects and programmes with sums attached. But instead of the Brown approach in which all the innovations were state-run job creation schemes, the Osborne ventures were designed to stimulate private sector growth.

This was billed as a Budget for Growth, and a major tax reforming Budget out of the Nigel Lawson mould to boot. Instead it sounded much like one of Gordon Brown’s budgets – a little bit of give here, and a lot of takeaway somewhere else.

14.21 How the Budget affects you from the Telegraph's personal finance expert Ian Cowie:

George Osborne thumped on the desk five times in the Budget (unless I missed some quieter moments). 1.) Britain and its competitiveness; 2.) Companies as being key to growth; 3.) Top earners and income tax; 4.) Apprentices; 5.) Job creation.

14.04 Chief Secretary to Treasury Danny Alexander speaking on BBC highlight corporation tax and educaiton improvements as measures vital for growth. On fuel duty, he says he's asking the big oil companies to share the profits with the motorists. He explains that the tax on the energy companies is a levy on the extraction of oil from the North Sea which will rise from 20pc to 32pc, so it's a tax on profits.

But he's not very clear on what's stopping oil majors from simply passing on the extra cost to the motorist.

13.59 BBC's Peston predicts that people will complain that big businesses have been given all the tax breaks but the Coaliton will argue that this is vital for jobs. The Chancellor's corporation tax cuts will give about £2bn back to business from the Treasury, so most big companies will welcome the Budget - except the banks. The bank levy has been pushed up - just weeks after the painful Project Merlin talks at which Osborne pledged a stable tax regime for the City.

13.40 Miliband is plugging on. He calls Osborne "Norman Lamont with an ipod". MPs are throwing his jokes back at him: he's struggling to be heard over jeers of "alarm clock Britain; alarm clock Britain."

13.32 Leader of the Opposition: Ed Miliband stands for toughest job: instant reaction to a Budget full of surprises. Labour back benches back him by joining in when he claims that Britain's growth is "down, down, down."

13.30: HIGHLIGHTS: Fuel duty scrapped 1p; Personal tax allowance rise; corporation tax 2pc lower than 1pc; 1pc discount on inheritance tax for those who leave some of their estate to charity; £100m for pot hole repairs; £250m to help first time buyers build new homes;

13.24 Now the slippery subject of petrol prices:

Osborne: "Britain is not in charge of world oil prices". Says he has listened to the concerns of the public but rejects separate VAT rate for petrol which he reckons would be "illegal". Planned fuel duty increase of 1pc above inflation to be scrapped and fuel escalator will be ditched when oil prices are high. Fuel duty will be lower by 1p from 6pm tonight.

@JonathanSibunNo changes to alcohol tax. Which means the accelerator is still in place. Brewers not going to like it although no big surprise.

13.20 Those personal tax changes explained:

Telegraph's Ian Cowie says: "Personal allowance - or slice of income everyone can receive before having to pay any tax - will increase to £8,105 - or £630 more than expected - from April, 2012. As a result, Chancellor says 1.1m low-paid people will have been taken out of tax system altogether since Coaltion Government elected."

13.17 Every local authority in Britain has agreed to freeze council tax this year

13.16 Osborne says the tax avoidance measures will save £1bn this year; £4bn over the Parliament

Get ready to work longer before retirement and pay more for it. New more automatic system will be introduced to assess increases in State Pension Age to keep pace with rising longevity. Public sector workers will have to pay 3pc more for pensions. Chancellor says new flat rate State Pension expected to be worth £140 a week, based on National Insurance Contributions, will take years to implement.

The Chancellor has once again chosen to raid the banks to pay for the cuts in corporation tax, repeating the approach he took at the Emergency Budget. By increasing the burden faced most by banks headquartered in the UK, the Chancellor continues to increase the incentives for banks to migrate.

Good news he's got a fresh glass of water. It's about the only thing in this speech that is fresh. Much of what he is saying has been leaked in recent days.

13.10 On education and skills, Osborne said he would double the number of new technical colleges to 24 and increase the number of apprenticeships by 250,000 over the next ten years.

For pensioners, the Chancellor said the Government will seek to bring in an automatic system for raising the pension age in line with longevity forecasts. Personal contributions to public sector pensions will go up by 3pc.

13.10 Telegraph's Ian Cowie notes:

Good news for cyclists and motorists. Chancellor promises £100m extra funding for councils to fill potholes.

13.04 Osborne expands Mrs Thatcher's Enterprise Zones - Boris Johnson, Mayor of London, is among those allowed to propose new zones. Tomorrow Northern Ireland will publish its own Growth Paper.

It was reported to be 20 enterprise zones and none in London. It's 21 and one in London. Last minute lobbying from Boris...?

13.00MARKET LIVE Sterling falls to the day's low versus the dollar as Mr Osborne released a lower growth projection. Sterling fell around 25 pips to a session low of $1.6230 to trade down around 0.8 pc on the day

Telegraph's Rachel Cooper notes that equities appear relatively unmoved by Mr Osborne's pronouncements. The FTSE 100 is flat at 5762. However, housebuilders are up amid news that first-time buyers are to receive more support from a £250 million shared equity scheme . Redrow and Barratt Developments are up 3.3pc and 3.1pc.

13:00 - Osborne offers a range of incentives for research and development, and money for science. "I've been able to fund, from the bank levy, £100m for new science facilities" Cambridge, Norwich and the National Space Centre will be among the beneficiaries. Osborne also said the small companes research and development tax credit will be raised to 200pc this year and 225pc the following year. He said he took the decision following advice from inventor and entrepreneur James Dyson.

From The Sun's Business Editor: @steve_hawkes Ironic that vacuum cleaner man James Dyson urges Chancellor for greater support - he moved his factory to the Far East all those years ago

13.00 Osborne says the 50pc tax rate won't go yet, but he regards it as temporary:

High personal tax undermines tax revenues as people seek toavoid them. The 50pc tax rate will do lasting damage if it becomes permanent. I regard it as a temporary measure. But now is not the time to remove it whenwe are asking people in our society to make sacrifices. We are all in this together. I think its sensible to see how much revenue it actually raises.

12.58 Telegraph's Louisa Peacock says:

Measures to get rid of complex dual discrimination claims in the Equality Act will appease businesses, but what else does the Chancellor have in store for employment tribunal reform?

12.55 Snap reaction from the markets, being watched by the Telegraph's Rachel Cooper:

British government bonds stayed higher after Mr Osborne said growth this year will be 1.7 pc, lower than a previous forecast for a 2.1 pc expansion. The 10-year gilt yield was five basis points lower at 3.55pc.

12.52 On to the next economic ambitions, Osborne confirms that SMEs will be exempt from new regulations. Plus pledges a radical overhaul of planning rules.

12.50 Corporation tax will be cut by 2pc in April and a further 1pc for the next 3 years, reducing it to 23pc – 16pc lower than the US; 11pc lower than France; 7pc lower than Germany – the lowest in the G7.

The rate had been due to fall by just 1 percentage point to 27 percent from April. Osborne said the tax cut would be funded by increasing the government's levy on banks.

Osborne adds:

From the proceeds of this year's bank levy we will fund a 250 million pound commitment to first-time buyers. A new shared equity scheme, First Buy, will be available for first-time buyers who want to purchase a newly built property, but who cannot afford the high deposits. This will help 10,000 families get on to the housing ladder for the first time.

Harry Wilson says:

The £2.5bn annual Bank Levy will be used to fund a £250m shared home equity ownership scheme for first time buyers and a £100m upgrade programme for scientific facilities. That leaves another £2.15bn for the Government to spend... who else could benefit from the banks' enforced largesse?

But James Quinn, deputy business editor of the Sunday Telegraph, notes:

Bank bosses will likely be infuriated at Osborne here. He is increasing the unpopular bank levy at the same time as reducing corporation tax, to make sure banks do not benefit. Although he said 'Britain is open for business' it is perhaps not open for banks.

The Telegraph's Banking Corrrespondent Harry Wilson says the extra bank levy is not as clear-cut as it seems:

Britain's major banks won't be getting taking advantage of the fall in corporation tax as the bank levy will be increased to offset anything they gain from the fall. What impact this will have on the banks is doubtful given that many have billions of pounds in deferred tax assets that mean they are likely to pay litte or no tax for years to come - Lloyds, which is 41pc owned by the state, must make £15bn in pre-tax profits before it pays a penny in tax.

1249 Telegraph's Rowena Mason observes:

Nick Clegg shakes his head mournfully after Osborne announce merging of NI and income tax. Unclear whether distressed by the proposal or the shambles the system is currently in.

12.48 Osborne confirms that he will "consult" on merging NI and income tax. He insists the Government's "purpose is not to increase taxes but to simplify them". He says it could take years but "it is time we took this historic step."

12.45 The Sunday Telegraph's James Quinn:

Osborne moving on to much-heralded work on tax simplification. He chides the fact that the UK tax code has recently overtaken that of India, to become the longest in the world. He promises 43 complete tax reliefs will be cut under this budget.

12.44 Osborne says the Budget is designed to address four aims: improve the tax system; make Britain the best place to start a business; boost exports and create an educated work force.

12.43 Osborne has a pop at Labour about gold reserves:

"We have already decided to rebuild our foreign currency reserves, and we intend to purchase a range of high quality assets. But with the price of gold at a record high we won't be able to replenish the reserves sold at a record low."

He confirms that the OBR's predictions remain the same - that the Government will meet its targets of cutting debt as a proportion of GDP by 2015/16, and is expected to achieve it one year early.

1241 Growth forecasts are DOWN. Osborne admitts that the Office of Budget Responsibility has cut growth for 2011 to 1.7pc from 2.1pc. Inflation is expected to stay at 4pc to 5pc for the rest of the year.

1236 As well as the Budget, Osborne confirms that the Coalition will today publish its delayed Plans for Growth

1234 Osborne says the Government is helping Britain to move from "rescue to reform and then to recovery." He promises this won't be a "tax raising budget, but nor can it be a give away." He says that this is a "Budget for making things not making things up."

12.33 Here we go: the clock starts at 1233. The Speaker vacates the chair for the Deputy, as protocol dictates and Osborne rises. William Gladstone has the record for the longest Budget speech: in April 1853 he continuously for four hours 45 minutes. Our bet is that Osborne will speak for about an hour.

12.25 More reaction to Prime Minister's qu's from Rosa Prince:

Miliband hasn't helped himself by letting Shaun Woodward and Douglas Alexander squeeze in between him and Balls at PMQs. Surely the Labour leader needs his shadow chancellor closer when the real business starts at 12.30pm?

Skim reading the Budget Red Book is vital - and a tough task even for Treasury veterans like the two Eds.

Of course it is Ed Miliband who makes the Budget response to Osborne, not his shadow.

12.20 David Cameron responds to questions from MP for Durham by promising that the Budget will "fire up" growth in the North East. He also "hopes" the Chancellor will "have something to say" on high speed rail.

12:08 Rosa Prince outlines the difficulties Ed Miliband will face in making his Budget reponse:

It will be interesting to see how Ed Miliband tackles the Chancellor in his first Budget response as Leader of the Opposition.

With Ed Balls, the architect of Labour's spending boom, glowering beside him, the safe option would be for him to focus on growth - the accusation being that the Government has failed to provide for the private sector recovery needed to fill the gap created by the shrinking state.

But that won't appease party figures such as Hazel Blears who, asthe FT points outthis morning, are becoming increasingly concerned at the leadership's failure to set out how Labour would tackle the deficit.

12.04 Ed Miliband's first question is about military action in Libya. David Cameron says there has been an "early and good effect" on Gaddafi's forces and protecting civilians but "more needs to be done."

12.00 Prime Minister's Questions about to kick off in a packed Chamber in the House of Commons: standing room only for late-running MPs.

11.56 More hints from BBC Business editor Robert Peston:

If corporation tax is cut, I would expect clampdown on tax breaks for the wealthy. Offshore employee benefit trusts vulnerable

11.53 The Budget must be important – the Skycopter is circling the Houses of Parliament...

11.50 Meanwhile a rallying call to get us in the mood for growth - a text message just in from George Freeman, new Tory MP for Mid-Norfolk: "The only way out of Labour's mess is to trade our way out. Let's encourage high tech entrepreneurs, risk takers and trigger a renaissance of enterprise."

11.42 Twitter reports are coming in of protestors lying in front of George Osborne's car blocking his entrance into Parliament. People have chained themselves to the railings. Police are on the scene but rumours are that the Budget could be delayed. However the protestors were quickly removed as per the picture below:

11.36 George Osborne is on the steps of Downing Street brandishing a new red Budget Box and a purple tie (Ladbrokes was spot on: stewards inquiry?). A black car sweeps him away to Parliament.

11.35 With an hour left on the clock, the latest Budget predictions from the ground:

Channel 4’s Economics Editor: @faisalislam: smart money is on some sort of pledge for High Rate threshold not to be reduced below £42k

The Beeb’s Laura Kuennssberg:@BBCLauraK: George Osborne tells cabinet today he ll 'reform and rebalance' the economy with budget plans

From Politics Home:@paulwaugh No.10: Osb also told Cabinet his Budget wd have "steps to help families with the cost of living"

Meanwhile, the spoof Twitter feed of Elizabeth Windsor: @Queen_UK: The DoE has just text Mr Osborne: "You're on very thin ice, my pedigree chum". No response as yet. #budget

11.30: The Chancellor's big surprise could be on fuel duty, says Rosa Prince:

Michael Fallon - deputy Tory party chairman and sage on Treasury matters - has dropped a heavy hint that there may well be a fuel stabiliser after all.

In recent months this has been on the table, off again, and now perhaps it's back on the cards. Fallon has just told the BBC that he wants the duty "escalator" to be scrapped once and for all. What does he know?

11.26: Westminster wisdom from the Telegraph's Rosa Prince:

An hour to go and Westminster is holding its breath to see what George Osborne has held back from his otherwise widely pre-briefed second Budget.

We are expecting help for motorists, air travellers, first time buyers and a small give-away on tax thresholds.

Watch out too for an announcement on merging NI and income tax, possible help for small businesses in terms of corporation tax and some scene setting on pensions.

One prediction which has already been fulfilled - the bookies have triumphed by guessing correctly that the Chancellor would wear a purple tie.

11.12 Despite the hype, the Budget has been surprisingly well trailed. Kamal Ahmed, the Sunday Telegraph’s Business Editor, tweets:

@kamalahmed1In the olden days you used to face criminal prosecution for leaking bits of the Budget. Nice BBC list here http://bbc.in/g9bQZ5 #budget

11.10 The MPC may not have changed its mind on interest rates but Britain’s homeowners don’t expect that to last – the number of people remortgaging their houses reached a 19-month high in February, according to the British Bankers’ Association.

People are rushing to lock in repayments at the lowest rates possible, before the expected rate rises start.

11.07 The pound has remained depressed after the MPC minutes were published (see 9.46 post below) – and the Bank of England’s monetary policy makers said there is “merit in waiting” to see what the impact of higher oil prices will be on inflation.

While the markets were left slightly disappointed, the Bank of England could still introduce a rate hike as soon as July. While increasing rates would guarantee a summer of respite for sterling, the potential impact that a series of hikes could have on economic growth will be playing on Osborne’s mind today.

11.05 Not to steal the Chancellor’s thunder, but the BBC has done a very useful guide to thethings we already know about the Budget- 50 tax and benefit changes that will come into force on April 6.

11.01 A poor trading updatefrom Sainsbury's demonstrates how retailers need Government support right now, says James Hall, the Telegraph's Retail Editor.He reports reduction in business rates and help on fuel prices - which will free up household incomes - in today's Budget would be a start. The consumer economy is suffering badly, and this is before tax and interest rate rises and benefit cuts kick in.

10.38 Budget beginners start here: The Government's website has a helpful basic guide to questions like "where does the word "budget" come from (an old French word 'bougette' which meant 'little bag') to what is the budget ( the Government's annual financial statement and review of levels of taxation). Warning, beware of some "austerity" explanations, for example:Q Why is there a budget every year? A Because certain taxes, such as income tax, are annual taxes, so they must be renewed each year.

10.28 Back to the important questions: what will George Osborne drink? The Westminster traditions allow the Chancellor to have a tipple of his choice at the Despatch Box on Budget Day – the only time alcohol is allowed in the Chamber.

Gladstone famously had sherry with beaten egg; Disraeli went for brandy; Kenneth Clarke whiskey and Geoffrey Howe had a gin & tonic.

Despite presiding over the boom years, the Scottish Chancellors Alistair Darling and Gordon Brown stuck to the water.

Given that Osborne is supposed to be a pint of ale man (champagne, more likely), this is one New Labour policy the Chancellor is unlikely to review.

10.23The Budget hasn’t even been unveiled yet and the unions are planning fresh strikes over cuts. An angry press release from Unite, Britain's biggest union has landed:

On Thursday 24th March,Unite together with Unison and other trade unions, will be staging a major demonstration in Southampton against the Conservative controlled council's imposed pay cuts of up to 24 per cent for all employees.

Mark Wood - Unite Convenor said: "This demonstration is just the beginning. An industrial action ballot and legal challenges are on the horizon. We would much rather resolve this matter by negotiation, however we are being forced into this last resort by an unreasonable employer, hell-bent on breaking its workers."

10:17 The ghosts of Chancellors past - the BBC's Nick Robinson tells usGeorge Osborne has an ambition to be seen as "a great reformer" in the mold of Nigel Lawson and Michael Heseltine. He says:

Osborne will know his history well enough to know that a Budget hailed on the day can turn into one condemned long after. Lawson's boldest Budget - in 1988 - cut the basic and the top rate of tax. It was blamed by many later for fuelling - instead of curbing - the excessive growth of the time.

10.16 What’s your view? The Telegraph’s Louisa Peacock has opened a reader forum – write in with your reactions to whether the Budget will deliver jobs and growth

09.50 To clarify: the 6-3 split on the MPC is a repetition of last month's decision. Reaction is coming through from the City.

Philip Shaw from Investec says:

It doesn't look as though the MPC is any closer towards deciding to push rates up in the near term. The committee concluded that as a result of recent events there was greater uncertainty with regard to the outlook for both inflation and output, but that the balance of risks overall was largely unchanged.

Some members of the committee also also appeared a bit more concerned over some of the weakness in consumer spending. Overall, we continue to think that rates will probably stay on hold for the next few months, and while a May hike is clearly possible, we still tend towards the view that the softness in high street activity, in particular, will encourage the MPC to maintain the curent stance of policy until August.

Alan Clarke from BNP Paribas says:

Broadly as expected. I think it is a slight evolution in the hawkish direction, particularly the emphasis on inflation likely to be above 5 percent and signs of higher pay pressures and concerns that externally-generated inflation, especially from commodities, threatens the medium-term inflation outlook.

They are moving in a hawkish direction, but for those members reluctant to hike, the uncertainty that is holding them back has got even worse.

09.46 So the MPC minutes are out. The Bank of England policy makers had voted 6-3 to keep interest rates on hold as they saw “merit in waiting” to assess the oil-price jump, even as they forecast inflation may accelerate to faster than 5pc, Bloomberg reports. Snap reaction from the markets: Sterling falls to lows versus the dollar and the euro.

Sterling fall around to hit a session low of $1.6283 against the dollar. The euro rose around to a session high of 87.12 pence. June gilt futures briefly pared gains by ten ticks after the minutes to trade at 117.97, having stood at 118.07 before the release.

09.29 Seeking certainty? The Telegraph's Richard Tyler has Tweeted that Osborne can do what he likes today, it won't influence the PM's green agenda:

@richardtylerwhatever happens on #budget day the lights will go out across Britain come Saturday's #earthhour (David Cameron says he will switch off his lights for an hour at 8.30pm)

09.21 It’s not just the Budget that the markets are looking out for today. At 1030 GMT - three hours before the Chancellor stands up - the Monetary Policy Committee will publish its minutes.

The fiscal tightening, if fully applied, will be the second largest among all the OECD economies, amounting to almost 6 per cent of GDP over 5 years. Only Greece has embarked on a more draconian tightening. The impact of this tightening really starts to bite this year, when the structural budget deficit falls by 2 per cent of GDP, twice as much as last year.

In the absence of this fiscal tightening, the UK would have continued to run just about the largest ongoing budget deficit in the developed world, and the public sector debt ratio would have continued to rise into the indefinite future, exceeding 100 per cent of GDP by 2020.

09.15 As the graph below shows, the stock market is down shortly after opening, while the pound also fell against the dollar, ahead of the Budget announcement at lunchtime.

10-year UK government bonds looked more settled, with the yield declining, showing that investors regard British debt as a safer investment.

09.00 The Shadow Chancellor has finished his morning routine and is on his way to the office to prepare his reply to the Budget - traditionally a difficult and thankless task.

He's just Tweeted: @edballsmpJust dropped the children off at school - now to Westminster for the Budget speech

08.58 Talking of Osborne dropping the brief case, the actual vessel that will carry the Budget from Downing Street to Parliament is under debate. The famous tatty red leather Budget Box - which was first used by Gladstone in 1860 - is being retired (again) this year.

Apart from James Callaghan, who insisted on using a larger brown box in 1965 and Gordon Brown who commissioned a brand new red briefcase in 1997, every chancellor always used the same one. Osborne used it for the Emergency Budget but we were told that was the VERY last time because it is now deemed in too poor condition.

Long term, however, it will be the extent to which he [George Osborne] embraces tax reform - sweeping away tax reliefs and merging income tax and national insurance - which will define him and this budget.

08:44 It's also a big day for Ed Milliband, his first Budget day as Leader of the Opposition. He told Sky News:

There would be cuts under Labour but we wouldn't go so far and so fast... We wouldn't be cutting taxes for the banks, we would have a bonus tax to help get the young unemployed back to work.

08.41 The bosses of some of Britain’s biggest companies have delivered their Budget wish-listto the Telegraph.

Andrew Moss, CEO of insurance giant Aviva, says:

The 2011 Budget must be encouraging people to save more for the long-term. We have one of the largest savings gaps in Europe - on average people in the UK should be saving £10,000 more a year in order to achieve a comfortable retirement.

08.40 The Treasury will serve up the Budget speech in bite-size chunks on Twitter later, get the link here.

08.37 Perhaps not as lofty as the growth and taxes but just as hot a topic: the Budget bets are open.

As ever the colour of the Chancellor's tie is the Big One. Boylesports is playing it safe offering 11/10 odds that Osborne will pick blue, 4/1 grey, 14/1 brown and 50/1 that he opts for the "Notting Hill Set" classic: the open neck shirt. Ladbrokes is far more punchy, confidently declaring that it is "most likely" that Obsorne will be wearing a purple tie today. The bookies political odds compilers make purple the 2/1 favourite with a red tie a 12/1 chance. It's 25/1 he wears an orange tie with white the 33/1 outside.

If Osborne's fashion doesn't tickle you, have a flutter on anything from catchphrases to blunders. Ladbrokes reckons it's odds on (1/5) ) that 'budget for growth' gets mentioned and 'tough choices' is an even money shot. Ladbrokes is also offering 8/1 odds that Vince Cable, the Business Secretary, gets caught yawning and 20/1 that Osborne drops the red brief case.

08.19 The consequence of NOT cutting the deficit? Portugal is getting closer to having to ask for an international financial bailout, the BBC has reported, after opposition parties withdrew their support for the country’s austerity measures.

08.18 The Telegraph has collected together a list of the best Twitterers to keep an eye on. They are already offering a pool of resources, here's a selection:

@hmtreasuryVideo: Chief Secretary to the Treasury Danny Alexander talks about the Government's priorities for the 2011 Budget bit.ly/eMTsLw #budget11

"According to economists at the Royal Bank of Scotland, it cost £95,000 to insure £10m of UK sovereign debt in the run-up to the May 2010 general election. Over the past year the cost has fallen to £73,000.

Yet Osborne knows that the hard work has just begun. Politically, the coming year will prove far more challenging for the Chancellor and his coalition partners, as the Treasury attempts to reduce public sector net borrowing from 10pc of GDP in 2010-11 to 7.6pc in 2011-12."

07.48 The BBC’s Radio 4 Today programme have lined up former politicians to pour a healthy dose of scepticism about the Chancellor's promises for growth. David Mellor reckons George Osborne should "stand at the despatch box and say: I do not control growth."

Former Chancellor Norman Lamont adds that the problem with growth policies is that they take a very long time to make any impact. Lord Lawson agrees saying that economies can’t be micro managed - "all you do is complicate and mess up the tax system."

07:35 The Chancellor will raise the tax-free threshold by £600 to more than £8,000 on today's Budget, which will see 25m people receive a £45 tax break a year, the Telegraph reports on its front page.

07.30 Good morning it’s Budget Day. After tough deficit reduction measures in the Emergency Budget in June, the Coalition has been at pains to insist that today will be about growth. More likely it will be a big dose of reality as some of the cuts come in. We're here to scrutinise the complexity and bring you the analysis and commentary as it happens.

The economic backdrop to the 2011 Budget darkened on Tuesday with a shock rise in inflation to 4.4pc and higher-than-expected borrowing in February.